The Power of Creative Destruction

Creative destruction - the process where new innovations replace old innovations - is at the heart of economic prosperity, driving growth and reshaping entire industries.

In our 10th Innoscape Talk, we had the honor to interview Prof. Philippe Aghion during his visit at the Faculty of Business and Economics and the Center for International Economics and Business (CIEB) at the University of Basel. He is a pioneer in modelling and fully understanding the process of creative destruction (a term and idea developed by Joseph Schumpeter) and one of the world's leading researchers in the area of innovation and growth. In this video, Prof. Aghion shared his insights from his research over many decades.

Drawing from his book “The Power of Creative Destruction”, Philippe Aghion dives into the tensions between progress and resistance and explores how policies can maximize innovation while being aware of its implications. In the discussion, Prof. Aghion also shows how economic theory can help us to analyze and understand pressing real world issues and how economics has helped to find better policies to solve recent economic problems.

Prof. Aghion highlights how competition spurs innovation by motivating top-performing firms to "escape competition" through advancement, while also stressing the importance of labor market policies to help lagging firms and workers to adapt. He reflects on how Schumpeter’s fear of entrenched incumbents preventing innovation is playing out today and why green and inclusive growth is the defining challenge of our time – and how it can be supported in economic policies.

This conversation offers profound insights into how governments, firms, and civil society can collaborate to harness the power of innovation; it is precise, but also encompassing and highly relevant, making it a must-watch for policymakers, business leaders, economists, students, faculties and anyone interested in the future.